USC Law School/Beverly Hills Bar Association Entertainment Law Institute
I. Broadband Content Panel Discusses New Release Windows
II. New Technologies are Changing Advertising Paradigm
Last month, the USC Law School in conjunction with the Beverly Hills Bar Association convened the 2004 Institute on Entertainment Law and Business. The event, which was attended by major entertainment and media business leaders and attorneys, was focused this year on the role of emerging digital technologies and the ramifications of these changes on the entertainment industry.
I. Broadband Content Panel Discusses New Release Windows
The lead panel for the event was comprised of Terry Bienstock, the outgoing Executive Vice President and General Counsel for Comcast Cable Communications and Yair Landau, the Vice Chairman of Sony Pictures Entertainment and President of Sony Pictures Digital. In addition Paul Glist, participated on the panel.
Mr. Bienstock focused on Comcast’s existing and future platforms for delivery of digital video programming. By the end of the year, video on demand (VOD) will be available to 80 percent of Comcast’s subscribers. Comcast’s existing VOD service provides 1,200 hours of on-demand programming. Mr. Bienstock expects that in the next 1-2 years, Comcast’s VOD service will include up to 10,000 hours of programming. VOD programming will include blockbuster content as well as provide an outlet for new innovative media content that might not otherwise be available generally to the public. VOD therefore will create opportunities for smaller independent content producers. Comcast also has an Internet service, referred to as “The Fan” which contains a variety of short-length video content.
Mr. Landau emphasized that in the future video services will be delivered from an increasingly broad array of delivery platforms that will help to expand the overall consumption of video content, assuming piracy issues can adequately be addressed. Mr. Landau stated that the plug and play rules negotiated by the cable industry are a step in the right direction for controlling piracy, but that more work needs to be done to ensure secure delivery of IP video, which is not subject to the plug and play rules. Mr. Landau also acknowledged that the emergence of new technologies will ultimately force the studios to move existing release windows forward. This means that cable operators ultimately may be able to provide movies on their VOD platform closer in time to, or perhaps even concurrently with, the movie’s theatrical release.
Mr. Glist provided background on the plug and play rules and explained their role in securing delivery of high-value content in the digital world. He emphasized that building content protections into the network, as the plug and play rules do for current business models, will be an essential precondition to new broadband services development. Plug and play compliant devices will respect three levels of content protection that are intended to mimic the existing fair use rules applicable to copyright protection. Users will not be permitted to make digital copies of first release movies, such as those that exist now on the pay-per view service, but will be able to pause such content for up to 90 minutes during viewing to permit breaks. Content on premium subscriptions services, such as HBO, will be permitted to be copied once. Re-transmitted broadcast television will not be restricted; viewers will be permitted to copy it freely. These rules will facilitate delivery of a wider range of digital video content over cable, while ensuring that protected content will not find its way on to the Internet and circulated widely over P2P networks.
II. Changing Advertising Strategies Wrought by DVRs
Also of interest at the conference were discussions concerning the impacts of new technologies and delivery platforms on existing advertising models. One trend is toward more focused delivery of advertising. Through collection of data on aggregate viewing habits, cable operators will be able to better tailor delivery of advertising to viewers that will be most interested in the products.
The emergence of personal video recorders (PVRs), however, is expected by many to have a significant impact on how advertising is delivered. The traditional model that we are all familiar with is one of interruptions, where video programming is interrupted by a series of 30 second spots. PVR’s allow viewers to fast-forward through or skip commercials, and thus call into question the future of the 30-second spot.
Many believe that in the future the 30 second spot will be replaced by embedded advertising. One form of embedded advertising is product placement. Many of you may recall a very early example of this form of advertising that occurred in Spielberg’s movie, “ET,” which featured an extra-terrestrial with a taste for Reese’s Pieces. A newer form of embedded advertising that has been used successfully in reality-based television programming involves content built around particular brands. For example, the first episode of “The Apprentice” this year was focused around the development of a new toy by each of the opposing teams. The contest took place in Mattel’s design facilities and the Mattel product development team participated in the episode by providing consultations to each team. While no Mattel product was advertised, the Mattel brand was intertwined seamlessly with the plot line of the episode.
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